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Which situation best reflects the concept of free enterprise?
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1. Introduction to Microeconomics
Introduction to Economics
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Which of the following best describes economic utility?
A
The total amount of money a firm earns from selling its products.
B
The satisfaction or benefit a consumer derives from consuming a good or service.
C
The cost of producing one additional unit of a good.
D
The amount of resources required to produce a good or service.
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Understand that economic utility refers to the satisfaction or benefit a consumer gains from consuming a good or service.
Recognize that utility is a concept used to measure consumer preferences and happiness rather than monetary values or production costs.
Differentiate utility from revenue, which is the total money earned by a firm from sales, and from costs, which relate to production expenses.
Recall that marginal cost is the cost of producing one additional unit, which is different from utility.
Conclude that the best description of economic utility is the satisfaction or benefit a consumer derives from consuming a good or service.
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